BIOLASE, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Income Tax Current and Deferred Provision (Benefit)

The following table presents the current and deferred provision (benefit) for income taxes for the years ended December 31 (in thousands):

	2013			2012			2011
Current:
Federal	$	(138	)	$	—		$	—
State		31			18			16
Foreign		(27	)		32			20
		(134	)		50			36
Deferred:
Federal		72			57			66
State		(118	)		12			(16	)
Foreign		16			(8	)		3
		(30	)		61			53
	$	(164	)	$	111		$	89

Federal Income Tax Provision Compared With Statutory Rates

The provision for income taxes differs from the amount that would result from applying the federal statutory rate as follows for the years ended December 31:

	2013			2012			2011
Statutory regular federal income tax rate		(34.0	)%		(34.0	)%		(34.0	)%
Change in valuation allowance		27.0	%		(13.0	)%		(2.3	)%
Tax return to prior year provision adjustments		(0.9	)%		16.2	%		2.0	%
Expiration of federal net operating losses		—			28.2	%		20.2	%
Reduction of net operating loss attributes		(3.1	)%		(3.7	)%		(2.3	)%
State tax benefit (net of federal benefit)		(4.2	)%		4.1	%		18.1	%
Research credits		(2.1	)%		—			(3.0	)%
Foreign amounts with no tax benefit		(0.2	)%		(0.6	)%		(0.2	)%
Non-deductible expenses		1.6	%		6.1	%		3.8	%
Effect of change in rate		14.2	%		—			—
Other		0.3	%		0.5	%		(0.3	)%
Total		(1.4	)%		3.8	%		2.0	%

Summary of Net Deferred Tax Assets and Net Deferred Tax Liabilities

The components of the deferred income tax assets and liabilities as of December 31 (in thousands):

	2013			2012
Capitalized intangible assets for tax purposes	$	283		$	405
Reserves not currently deductible		1,702			2,082
Deferred revenue		8			328
Stock options		2,565			2,348
State taxes		7			45
Income tax credits		1,583			1,167
Inventory		871			868
Property and equipment		376			240
Other comprehensive income		109			127
Unrealized gain on foreign currency		142			160
Net operating losses		28,058			25,746
Total deferred tax assets		35,704			33,516
Valuation allowance		(35,566	)		(33,341	)
Net deferred tax assets		138			175
Capitalized intangible assets		(696	)		(703	)
Other		(59	)		(119	)
Total deferred tax liabilities		(755	)		(822	)
Net deferred tax liabilities	$	(617	)	$	(647	)

Summary of Unrecognized Tax Benefits

The following table summarizes the activity related to the Company’s unrecognized tax benefits during the year ended December 31, 2013 (in thousands):

Balance at January 1, 2013	$	1,226
Additions for tax positions related to the prior year		—
Lapse of statute of limitations		(658	)
Balance at December 31, 2013	$	568

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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